India’s forex reserves rise to 10-month high
According to Reserve Bank of India (RBI) data released, India’s foreign exchange reserves increased marginally by $4.53 billion to $588.78 billion during the week ending April 28. The country’s forex reserves kitty is at its highest level in 10 months.
As per the data, India’s foreign currency assets, the biggest component of the forex reserves, rose by $4.99 billion to $519.48 billion. During the week ending April 21, the country’s foreign exchange reserves had fallen by $2.164 billion to $584.248 billion.
Incidentally in October 2021, the country’s forex reserves had reached an all-time high of $645 billion.
Gold reserves during the latest week fell by $4.94 million to $45.65 billion.
The RBI, from time to time, intervenes in the market through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.
The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band.
In the week ending April 21, the forex reserves had fallen largely because of the RBI’s intervention in the market to defend the depreciating rupee against a surging US dollar.
The rupee was little changed at close on Thursday in a holiday-shortened week, as likely dollar purchases by the central bank offset foreign inflows into the domestic equity market. Rupee ended at 81.80 compared with 81.8175 in the previous session despite the U.S. Federal Reserve changing its forward guidance to indicate a conditional pause.
The Reserve Bank of India (RBI) likely stepped in to cap the rupee’s sporadic upside through the week, reported Reuters, citing traders.
There were dollar bids from oil marketing companies seen on Thursday, two traders said.
“The Indian rupee continues to behave in a range-bound manner, thanks to the RBI’s intervention. But an improving balance of payments position bodes well in the medium-term, although gains will likely be limited,” Reuters quoted John Bromhead, FX strategist and macroeconomist at ANZ, as saying, at the Reuters Global Markets Forum on Thursday.
For the week, the rupee fell 0.03% to the dollar and was in a range of 81.945 to 81.66. India’s forex markets were off on Monday and are shut again on Friday for a local holiday.
[With Inputs from IANS]
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